Rizzoli Corriere della Sera Mediagrp : Press Release – RCS MediaGroup Business Plan 2016-2018

OBJECTIVES

sustainable economics

business transformation

growth and development

ACTIONS

significant cost reduction

beyond digital:

new forms of monetization

new contents for new audiences

international development: sports and Spanish language

cross-country organization

2018 TARGETS[1]

Revenues slightly up (CAGR+1.5%)

Net efficiencies amounting to Euro 60 million

EBITDA double that of 2015 - EBITDA margin at 13%

Both net profit and net cash flow positive starting from the first year and constantly improving

Debt/EBITDA reduced to ~ 2x

Milan, 21 December 2015 - CEO Laura Cioli, in office since 12 November 2015, has completed the review of the RCS MediaGroup Business Plan 2016-2018. After its approval by the Board of Directors last Friday, the new Plan is being presented to the financial community today.

The editorial segment is going through a phase of profound transformation, with all existing paradigms in terms of media, content, audience, frequency and distribution having radically changed. Content consumption is constantly growing, driven as it is by the time spent online, while the traditional print media is continuing along a structural decline. Audiences have developed new methods of interacting with content, with a continuous demand for updates and, at the same time, a rising interest in global and hyperlocal contents. The advertising market is also undergoing considerable change with increasing less distinction between AboveTheLine and BelowTheLine, and there is more and more integration with the content.

These changes are radically altering the opportunity profile for publishing companies. They can, and must, face the challenges of promoting contents and data in the future, of the transformation of communications and marketing, and of the knowledge and retention of audiences. Focus will be centred on a new and different idea of the product that integrates its different dimensions in a systemic and balanced manner: quality of the offer, monetization capabilities, costs and generation of cash.

In this context, the RCS Group has the opportunity to build a solid future based on its undisputed leadership position in the markets where it operates thanks to excellent brands, on its ability to develop and promote iconic events and sport formats, and on its potentials for synergies and international expansion rising out of its multi-language and multi-country configuration.

The future success of the RCS Group is linked to the achievement of three key objectives:

• Ensure sustainable economics over the short and long terms;
• Extract top value from the Group's assets, also by profoundly transforming its business;
  • Set strong foundations for future growth.

To achieve these objectives, the Plan is focused on eight basic actions:

1. Persistently reduce costs while protecting investments and quality

2. 'Beyond digital': stabilize revenues and margins of Print+Web+Mobile editorial products

3. Selectively invest in high-potential areas

4. Exploit scale to optimize technological platforms

5. Optimize the value chain by leading the print industry consolidation process

6. Dismiss non-core/low value assets

7. Simplify the organization, focusing on capabilities, accountability and execution

8. Continuously monitor the Plan's execution

1. 1. Persistently reduce costs while protecting investments and quality

Net benefits amounting to about Euro60 million are forecast for 2018. Roughly Euro 45 million will come from measures implemented on external costs; about Euro 15 million are connected with the labor costs, which is the result of a gross reduction of about Euro 40 million (right-sizing of the corporate functions and of process support and simplification, also appealing to union agreements), offset by an inertial trend and new recruitments totalling approximately Euro 25 million.

1. 2. 'Beyond digital': stabilize revenues and margins of Print+Web+Mobile editorial products

- Growth in the core brand audience by developing new products and verticalities to reach new targets and achieve synergies between brands.

- Rethink and revitalize the local editions and further strengthening by launching digital products that are hyperlocal, in line with the new demands of readers.

- Introduce new subscription models and - first in Italy - paywalls to adequately monetize the contents, become familiar with and retain the reader.

- Maintain price leadership for all the publications while balancing the drop in traditional revenues versus an ever-increasing richness and quality of the product.

1. 3. Selectively invest in high-potential areas

- Focus on sport events, especially cycling e running:full exploitation of the iconic formats (e.g. Giro d'Italia) along with international best practices; development of a broader system of competitive events; launch of new amateur and mass events. In the mid-term, assessment of opportunities for further strategic development, also through selected partnerships, whose impact is presently not contemplated in the Plan.

- International Spanish-speaking audience: expansion of pure digital by playing on the Marca and La Gazzetta dello Sport brands, whose leading editorial contents, event and athletes/sportsmen is of particular interest for the Spanish-speaking communities. Light development model through selected partners that guarantee a prominent presence in the area and complementary local content.

- Data-centric transformation: construction, in-depth knowledge and profiling of the Group's audience (30 million people) by taking advantage of every contact opportunity in order to improve current revenue streams and create new ones.

1. 4. Exploit scale to optimize technological platforms

Considerable strengthening and cross-country integration of the Group's technological platform to usher in digital transformation, rationalize costs and investments, develop synergies and open new revenue opportunities.

1. 5. Optimize the value chain by leading the print industry consolidation process

Promotion of the necessary process of optimizing the Italian printing industry by following a route that first of all is aimed at increasing saturation of the production system that the Group uses today and at assessing possible joint initiatives with other players in the Italian market.

1. 6. Dismiss non-core/low value assets

Rationalization of the portfolio of non-core assets (VEO and Sfera) that are not functional to the core business or are poorly performing by selling at the adequate price, by creating synergies or simplifying, and by continuously monitoring economic and financial prospects.

1. 7. Simplify the organization, focusing on capabilities, accountability and execution

New organization model, redesigned to be consistent with the Plan in order to:

- focus management and resources on the key elements of the strategy and on execution;

- achieve maximum cost and revenue integration and synergies between countries;

- ensure the tools needed for the transformation process

1. 8. Continuously monitor the Plan's execution

Continuous and detailed monitoring of the Plan's objectives and actions in order to guarantee prompt reactions to changes in context or to results that do not fall into line with expectations by developing alternative actions.

The targets of the Business Plan 2016-2018 follow. They are defined to ensure the Company a sustainable financial structure.

To see the charts with main targets download the Press Release

RCS Mediagroup S.p.A. issued this content on 2015-12-21 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 2015-12-21 07:17:26 UTC

Original Document: http://www.rcsmediagroup.it/en/press-release/press-release-rcs-mediagroup-business-plan-2016-2018/